Fixes typo in paragraph 12
The dollar and yen gained as relentlessly rising U.S. COVID cases nL1N2EG13N and election-year political uncertainty after a Supreme Court ruling on President Donald Trump’s financial records nL1N2EG0UO triggered safe-haven buying, knocking EUR/USD back and curtailing sterling's rally nL1N2EG1Q5.
Renewed worries about U.S.-China trade tensions nL1N2EG12A also encouraged the risk-off flows that led EUR/USD to reverse overnight gains to 1.1371 -- the closest it has come to reaching June’s 1.14225 EBS peak since then.
Disappointing German trade data nL8N2EG16Q hurt the euro by undermining the market narrative that Europe is a more attractive investment destination than the U.S. due to divergent pandemic paths.
Europe depends more heavily on exports, which the pandemic has damaged, than the U.S.
Still, the EUR/USD uptrend will remain intact unless it breaks 30-day moving average support at 1.1257 and the dollar index overcomes resistance at 97.09.
Though U.S. weekly jobless claims beat forecasts, they remained extremely elevated and may have been diminished by last week’s holiday.
The continuing claims fall to 18.062 million obscured the fact that a record 32.9 mln people were collecting unemployment checks nL1N2EF1U0.
Risk aversion stopped GBP/USD’s July rise at 1.2668 nL1N2EG0YU, which brushed up against the upper 21-day Bolli, 200-DMA and the underside of the uptrend line from March and May lows that it broke below in June.
USD/JPY slipped -- but less than yen crosses -- with losses limited to 107.10 on EBS due to the dollar’s recent uncharacteristic inclination to gain more from safe-haven demand than the Japanese currency.
This left USD/JPY in a slow retreat from July’s 108.16 fleeting peak.
Key on-close support is at 106.70, the weekly kijun and monthly tankan, that after falling out of the daily cloud and well below the daily tenkan and kijun lines this week nL1N2EG12A.
Falling Treasury yields, despite a 30-year auction, highlighted demand for the world’s top haven, taking the 10-year yields to their lowest since mid-May.
The Dow index fell away from its 200-day moving average, toward the rising 50-DMA that caught the late June and mid-May lows, perhaps providing a baseline for the recovery, risk-flows and the dollar as corporate earnings season approaches next week.
WTI and Brent retreated after failing to gain traction above where they gapped lower on March 9, put off by the U.S. COVID-19 acceleration and dim prospects for travel.
The next major U.S. economic release is retail sales on Thursday.
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